Motorola Mobility Sued by Shareholder to Stop Sale to Google

[dgstorm]

Here is a story that could either be a tale of extreme corporate greed, or one of an individual investor protecting his investment. We will give you the facts and let you decide which it is. Recently, Google announced that it would be purchasing Motorola Mobility for the price of $12.5 Billion dollars. That figure comes to $40 dollars a share to current Motorola Mobility shareholders, which is an instant profit of 63% on their investment. However, this amount didn't go over very well with one investor, named John W. Keating.

Mr. Keating, filed a complaint in a courthouse in Chicago against Motorola Mobility Holdings Inc. and its chief executive officer, Sanjay Jha, along with Google and nine members of Motorola Mobility’s board, claiming that they failed to get a better price. “The offered consideration does not compensate shareholders for the company’s intrinsic value and stand-alone alternatives going forward, nor does it compensate shareholders for the company’s value as a strategic asset for Google,” Keating claims. He further added, “Motorola has experienced an economic resurgence since separating into two separate companies. The Android smartphone technology it relies on continues to gain ground on Apple’s iPhone.” He indicated that shareholders will no longer be able to share in the future success of the company. Here's a quote from the Bloomberg article with the final details,

Keating accused the individual board members of breaching their duty to investors and claims Motorola Mobility and Google aided and abetted that breach.

He is seeking class-action, or group, status for the case, an order declaring the agreement is unenforceable and an order barring the completion of the sale.

Jennifer Erickson, a Motorola Mobility spokeswoman, said the company hadn’t yet had an opportunity to review the complaint and that she and couldn’t comment on it. Google declined to comment, Katelin Todhunter-Gerberg, a company spokeswoman, said in an e-mail.

What do you guys think? Does he have a legitimate concern, or should he have just been satisfied to "take the money and run?"

Source: Android.net via Bloomberg/Businessweek.com

 

[bosshog85]

I'd Just shut my mouth and take the money. Its pretty sad you can sue people for anything these days.

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[NoBloatware]

the complaint is interesting and it highlights a problem with corporations--as long as the board of directors and executives make out ok in a deal, there is little incentive to do the right thing for anyone else including other shareholders, employees, partners, the public, the government, the environment, etc.

 

[barski]

I'd just take the money and run, or reinvest if i had a lot invested into Motorola.

 

[danDroid]

The offer was almost double of what the shares were trading at prior, how is that not fair to the shareholders? Holding out for a higher price didn't work to well for Yahoo when Microsoft rolled in with a big offer. The grass is always greener...

 

[steveninspokane]

I'd Just shut my mouth and take the money. Its pretty sad you can sue people for anything these days.

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I am going to sue this guy if he messes up the deal.

 

[HamDog]

In this uncertain market, they need to take the money and run. There is way too much negative in the markets today. Europe's economy, Europe's banks (and what U.S. banks have invested in them), and our own economy are bringing markets down. Unemployment is still way too high. Foreclosures are going up. The Feds haven't announced anything about QE3 (Quantitative Easing). The market rebound has all been due to government spending and it's all ending.

In this environment, mergers and acquisitions won't do well. To have a big pocket company such as Google make an offer for Motorola; with a 60% increase in share premium, the investors need to take the money and run. Without this offer, shares of Motorola Mobility will continue to decline with the markets.

 

[ccgustavus]

I am going to sue this guy if he messes up the deal.

Great idea!!

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[Tillmorn]

Out of curiosity, was it not quoted in another thread that Moto was only worth roughly $12 billion? Given that they are not being kept afloat, at least in the phone market, what more does this person want? $50 a share?

 

[Immolate]

Drama suit. But drama suits often get paid to go away. As long as extortion works, people are going to extort. Case in point: Al Sharpton.

 

[cush2push]

he does bring up good points but they are invalid yes moto had a resurgence but now are on a downward spiral back to oblivion imo they are following the same path as the razr line of phones google stepped in to stop that

 

[kevsgroove]

Wonder if this John Keating is related to Charles W. Keating, whoop was chairman of the boars at Lincoln Savings and Loan. Mr. Keating and Lincoln were are the center of the Savings and Loan crisis in the late 80's early 90's. Took investors and the government for somewhere in the $3 billion range.

 

[wmfb]

He must have an interest in the Law Firm!!!

the only one that will win will be the lawyers...Motorola loses the sale, Google loses 2.5 because the sale doesn't happen, Motorola stock takes a dump, and Mr. Keating needs to find another hobby instead of instigating law suits! Our Country is feeding the legal system with shovels....look at the money being spent on criminal trials, civil suits, Bernie Madoff's, The government just keeps paying!!! I think it would give Google a great opportunity to really advance the Android system,

 

[kevsgroove]

Wonder if this John Keating is related to Charles W. Keating, whoop was chairman of the boars at Lincoln Savings and Loan. Mr. Keating and Lincoln were are the center of the Savings and Loan crisis in the late 80's early 90's. Took investors and the government for somewhere in the $3 billion range.

Forgot to add ......................... and homeowners.

 

[GBH2]

I wonder how much Microsoft, Apple and/or RIM are paying this dude to file the lawsuit.